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Generally, passive activities include: 

  1. Activities that involve the conduct of a trade or business if the shareholder does not materially participate in the activity and; 
  2. All rental activities regardless of the shareholder’s participation.

Activities that are not passive: 

  1. Trade or business activities in which the shareholder materially participated for the tax year.
  2. Any rental real estate activity in which the shareholder materially participated if the partner met both of the following conditions for the tax year.
  3. More than half of the personal services the shareholder performed in trades or businesses were performed in real property trades or businesses in which he or she materially participated.
  4. The shareholder performed more than 750 hours of services in real property trades or businesses in which he or she materially participated.

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